Key Takeaways
- Officially registered owner on company’s books.
- Entitled to dividends, voting, and communications.
- Ownership confirmed on the record date.
- Can hold securities directly or via brokers.
What is Holder of Record?
A holder of record is the person or entity officially registered as the owner of a security on a company's books at a specific point in time. This status determines who receives dividends, voting rights, and other shareholder benefits for corporations such as a C corporation.
The holder of record is critical in identifying entitlement to payments and corporate communications, distinguishing them from beneficial owners who hold shares indirectly.
Key Characteristics
The holder of record has distinct legal and financial rights tied to ownership.
- Ownership registration: Officially recorded in the company's shareholder register, which confirms your status.
- Voting rights: Holders of record typically have the right to vote on corporate matters, including board elections and mergers.
- Dividend entitlement: They receive dividend payments on declared dates, making them key in dividend stock investing such as with best dividend stocks.
- Corporate communications: Receive notices about meetings, proxy materials, and annual reports directly.
- Security types: Applies to stocks, bonds (including bondholders), and other securities.
How It Works
The holder of record is determined by the company's shareholder register maintained by a transfer agent or corporate secretary. On the record date, the company identifies which registered owners are eligible for dividends and voting.
Ownership can be direct, where your name is listed, or indirect through brokers holding shares in street name. Despite this, the holder of record is the official party recognized for legal rights, while beneficial owners enjoy similar economic benefits.
Examples and Use Cases
Understanding holders of record is important in various investment contexts.
- Airlines: Investors holding shares of Delta or American Airlines must be holders of record by the record date to receive dividends and vote at shareholder meetings.
- Dividend investing: When selecting from the best monthly dividend stocks, knowing the holder of record date ensures you qualify for dividend payments.
- Bonds: Bondholders registered as holders of record receive interest payments and principal on maturity, as with many bond funds.
Important Considerations
Being the holder of record secures your rights but requires awareness of key dates and registration details. If you trade shares close to the record date, you may not qualify as the holder of record and could miss dividends or voting privileges.
It's also essential to differentiate between registered holders and beneficial owners, especially if you hold securities through brokers. Ensure your shares are properly registered if you want to exercise full ownership rights.
Final Words
The holder of record determines who legally owns a security on the record date, impacting dividend payments and voting rights. Review your brokerage statements around key dates to confirm your status and ensure you receive all shareholder benefits.
Frequently Asked Questions
A holder of record is the person or entity officially registered as the owner of a stock or security on a company's books at a specific point in time. This status determines who is entitled to dividends, voting rights, and other shareholder benefits.
Dividends are paid to holders of record as of the record date set by the company. Only those registered as owners on this date are eligible to receive dividend payouts.
Holders of record generally have shareholder voting rights, allowing them to participate in corporate decisions such as electing the board of directors and approving major company actions.
The holder of record is identified through a register of shareholders maintained by a transfer agent or corporate secretary. The record date set by the board determines which shareholders are officially recognized.
A holder of record is registered directly with the company, while a beneficial owner holds shares indirectly through a broker or bank. Both typically have the same rights, but only the holder of record is listed on the company’s official register.
Yes, holders of record legally receive important corporate communications such as notices about shareholder meetings, proxy materials, and annual reports.
Yes, holders of record are counted for corporate actions like stock splits and rights offerings, and they are responsible for participating in votes and other shareholder decisions.
Direct registration means the investor’s name is recorded on the company’s share registry, making them a holder of record. Holding in street name means securities are held indirectly through a broker, with the broker listed as the holder of record.
